March 13, 2020
From Worst to First
Dow Scores Huge Comeback
After the Dow’s worst single day point loss ever yesterday, today was the first time ever the Dow gained nearly 2,000 points. There has been an incredible bout of market volatility in the last month. Since February 24, there have been 11 trading sessions when the Dow changed 3% or more. That is 11 out of 15 days! Simply said, extreme market volatility.
As stated, my policy is to write my Market Update when 2 or more of the main U.S. stock indexes fall 3% or more. Today, though, was worthy of this note. We have never seen this strong a market up-day ever.
Today’s advance was encouraging. As the chart below shows, the Dow closed above yesterday’s high. Volume, though, was too light to call today’s move convincingly bullish. Still, a better than 9% gain is the best daily gain since 2008. I said this in yesterday’s Market Update, “Remember, though, stocks do not go down forever.”
With less than an hour before today’s market close, President Trump declared the current coronavirus pandemic outbreak a national emergency and outlined a number of steps to improve testing and treatment. The emergency opens up $50 billion for state and local governments to respond to the outbreak. Stocks surged on the news.
Here’s the scorecard:
As the table below shows, today’s point gain was the biggest in history.
All 30 Dow stocks closed higher. Banks and software were among top performers in the 197 industry groups I monitor.
One of greatest stock investors of all time was Jesse Livermore. Among many nuggets of wisdom, Mr. Livermore said, “THE HUMAN SIDE OF EVERY PERSON IS THE GREATEST ENEMY OF THE AVERAGE INVESTOR.” Any one who let there emotions cause them to sell during yesterday’s worst down day in over 3 decades locked in those losses and missed today’s gains. Stay rational. Call me if you have any questions.
Hope this is helpful.
Thank you for your continued trust and confidence. I remain vigilant as I manage and oversee your investment account.
John